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2024 (2) TMI 1321 - CESTAT MUMBAI
Levy of Social Welfare Surcharge (SWS) on Goods Imported under MEIS Scheme - Benefit of Exemption Notification No. 32/2005-Cus. - benefit of Zero duty SWS - HELD THAT:- In the present case, it is not in dispute that the licensing authority has raised any objection with regard to non-observance or non-fulfillment of the conditions mentioned in the notification dated 08.04.2015. Thus, it would not be proper on the part of the Customs authorities to say that debit of customs duty in the MEIS scrip would disentitle the imported goods from the claim of the benefit of ‘Zero’ rate SWS. Since, the effective rate of the customs duty is ‘NIL’ or ‘Zero’, by virtue of the notification dated 08.04.2015, the rate of SWS when calculated in terms of Section 110 ibid would automatically become ‘zero’, inasmuch as SWS is to be calculated not on the value of the goods, but on the duty of customs levied on the imported goods, which is evident from sub-section (3) of Section 110 of the Finance Act, 2018. The said statue has mandated that SWS levied under Sub-section (1) of Section 110, shall be calculated at the rate of 10% on the customs duty levied and collected by the Central Government. In the present case, since no customs duty is leviable in terms of notification dated 08.04.2015, there is no question of payment of SWS.
Since there was ambiguity in context with the subject issue, the Tax Research Unit in the Department of Revenue, Ministry of Finance vide Circular No.3/202-Customs dated 01.02.2022 had clarified that calculation of SWS is dependent on amount of the customs duty that is actually payable and not otherwise. It has been in explained in specific terms that legal provisions does not require calculation of SWS on notional value of customs duty calculated, as in the present case, the BCD is calculated for purpose of accounting by debit entry in the MEIS scrip and the payment of BCD is exempt under Section 25 ibid.
Thus, we find that the clarification issued by the Ministry of Finance amply makes it clear that SWS is ‘NIL’, when the aggregate of customs duties for calculation of SWS is ‘Zero’.
Learned AR also made a submission that the Revenue has filed Review Petitions against the judgement of the Hon’ble Bombay High Court it the case of La Tim Sourcing (India) and La Tim Metal & Industries Ltd. [2019 (10) TMI 506 - BOMBAY HIGH COURT], and the same is pending. In this regard, we find that the Hon’ble High Court of Bombay had taken note of the judgements cited by the Revenue as decided by Hon’ble Madras High Court and after proper examination of the issues in hand had decided the case by holding the view that SWS shall be computed as ‘Nil’ when BCD is ‘Nil’. Inasmuch as the Hon’ble Supreme Court had already upheld the decision of the Hon’ble Gujarat High Court in the case of Pasupathi Acrylon Ltd.[2014 (1) TMI 169 - GUJARAT HIGH COURT] wherein it was held that no cess is payable when BCD is ‘Nil’, judicial discipline would not permit to take a different view than the one decided by the Hon’ble Apex Court. In view of the above and since, the said judgements of Hon’ble High Court of Bombay are in operation, this Tribunal is bound to follow the ratio decided therein.
Thus, we do not find any merits in the impugned orders passed by the learned Commissioner of Customs (Appeals). Therefore, by setting aside the impugned orders, the appeals are allowed in favour of the appellants, with consequential relief, if any.
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2024 (2) TMI 1320 - CESTAT AHMEDABAD
Denial the benefit of the exemption notification no. 45/2017-Cus and 46/2017-Cus - Re-importation of the goods - The appellant exported goods to Thailand but faced rejection due to quality issues - switch over to the benefit of another Notification No. 158/95-Cus - more than one Notifications are applicable for the goods - demand of duty - penalty - conditions required to be fulfilled of the same notification - HELD THAT:- It is settled law that where more than one Notifications are applicable for the goods, or to the concerned transactions, attracting levy of any duty or tax, it is the choice and the option of the citizen/assessee to claim benefit of a Notification that suits him; and it is also permissible to the citizen/assessee to claim benefit of any Notification at a later stage notwithstanding the fact that the citizen/assessee claimed benefit of another Notification at the initial stage.
It is evident that to be eligible for the benefit under Notification No. 158/95, the importation should take place within three years from the date of original exportation, goods are re-exported within a maximum of twelve months from the date of re importation and when such re-exportation is not effected as per the conditions of the notification, the differential duty liability on account of availment of Notification No 158/95- Cus. at re-importation is liable to paid up by the importer. There is no ambiguity, whatsoever, in the Notification issued by the Central Government. The Notification stipulates to export the goods after repairs or reconditioning within the period as stipulated and pay, on demand, in the event of his failure to comply with any of the aforesaid conditions, an amount equal to the difference between the duty levied at the time of re-import and the duty leviable on such goods at the time of importation but for the exemption contained therein.
We have considered the contours of the decision of M/s. Indian Rayon and Industries [2008 (7) TMI 401 - SUPREME COURT] which while dealing with the Notification No. 158/95-Cus held that once the benefit of Notification No. 158/95-Cus is taken the conditions are required to be fulfilled of the same notification. However, it is also noted that Notification No. 158/95-Cus was the only notification available at the time of re-import for most of the period.
We, therefore, direct the learned Commissioner may consider the benefit of Notification No. 45/2017-Cus and 46/2017-Cus, for the period, when they were available, and if otherwise applicable. We also find that breach of notification 158/95-Cus under which re-import was done, was committed.
The interest and penal consequences therefore have to follow. However, if another beneficial notification to the appellant was available and they are eligible for the same, then as far as duty is concerned, they can legitimately take the benefit of the same. Any other beneficial notification can be claimed at any stage by the party.
With these directions, we remand the matter for re-consideration by the adjudicating authority in terms of above principles.
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2024 (2) TMI 1319 - CESTAT NEW DELHI
Liability of Custodian to pay demand duty - Goods lost from the custody of the custodian, CONCOR - customs seal missing and replaced by a red colour private seal with no number - Inland Container Depot [ICD] declaring the imported goods as “glass beads with holes”- mis-declaring the nature of goods - Imported goods were glass chatons - confiscation - imposition of penalty - violation of section 45 - HELD THAT:- It is true that after finding the discrepancies in the declaration on 24.11.2014 the officer of customs took time and seized them only by seizure memo dated 23.02.2015 u/s 110. He also sealed the container with container customs seal numbers 227393 and 227394. He handed over the goods along with sealed container to CONCOR on 24.02.2015. There is nothing on record to show that the customs officers had taken the goods out of the customs area. There is also nothing on record to show that anybody else was permitted to and had taken the goods from customs area. With reference to a letter dated 24.02.2015 the custodian found on 28.2.2015 that the container seal was broken and there was a private seal in red colour without any seal number. On opening, they found the goods were lost. Clearly, there is no scope of any interpretation in this chain of events except that the goods were pilfered while they were in the custody of the custodian CONCOR.
Therefore, we find that in terms of section 45 (3), the CONCOR had to pay customs duty. Since part of the duty was already paid by the importer only the differential duty was demanded from CONCOR in the impugned order. We, therefore, find infirmity in the impugned order in so far as the confirmation of demand of duty u/s 45 (iii) on CONCOR is concerned.
Imposition of penalty u/s 117 - Clearly, there is violation of section 45 by the CONCOR inasmuch as it had not taken proper care of the goods in its custody and as a result they were pilfered. The value of the goods which were pilfered is Rs. 5,93,25,481/-. Considering this amount, we find that penalty of Rs. 1 Lakh imposed on CONCOR u/s 117 is fair and reasonable and calls for no interference.
Penalty imposed u/s 112(a) and 114 AA - confiscation - In this case, the importer is not in the business of importing the glass beads or glass chatons and was indeed a regular importer of radiators for tractors. This consignment was different and the importer had provided samples of the goods to be imported to Shri Bhatt who was the Manager of Shri B S Mann. In turn, Shri Bhatt had shown those samples to Shri Mann. In this factual matrix we find no reason to believe that Shri Mann had innocently filed the Bill of Entry with a wrong declaration. Both Shri Mann and his Manager were fully aware of actual goods being imported and had filed Bills of Entry with the wrong description.
Therefore, the goods were correctly held to be liable for confiscation u/s 111 (l)and (n) of the Customs Act. However, before the goods could be confiscated they were pilfered after their seizure while in the custody of the CONCOR. The Commissioner had, therefore, not imposed any redemption fine. Penalty u/s 112 (a) can be imposed on any person who, in relation to a goods, does or omits to do any act which act or omission would render such goods liable to confiscation u/s 111, or abets the doing or omission of such an act. In this case, the glass chatons were imported and having seen the samples even after the import Shri B S Mann and through his employees filed a Bill of Entry for glass beads. In fact, 90% of the goods were glass chatons. We, therefore, find that Shri B S Mann was correctly held liable to penalty u/s 112(a).
The value of the goods in this case was Rs. 5,92,25,481/-. Shri B S Mann, through his employees, filed the Bill of Entry mis-declaring the nature of goods having first obtained samples of the goods even before filing the Bill of Entry. As is clear from the cross-examination by Shri B S Mann, Manager of Shri Bhatt that not only he but also Shri B S Mann, himself had seen the samples before filing the Bill of Entry. We, therefore, have no hesitation in finding that the Bill of Entry filed knowingly mis-declaring the nature of goods.
Thus, we find that the penalty u/s 114 AA imposed on Shri B S Mann needs to be sustained. Hence, we uphold the impugned order in so far as it pertains Shri B S Mann and reject his appeal.
All the three appeals are dismissed and the impugned order is upheld.
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2024 (2) TMI 1318 - CESTAT AHMEDABAD
Classification of imported goods - rods or wires - Polycab-wires - Extended Period of limitation - Levy of penalty - HELD THAT:- It is apparent that the appellants have declared in their documents the fact that the goods were imported in the shape of coils. It has been recorded in the Order-In-Original as well reproduced in Counsel's arguments. The only reason for change of classification is the chapter note (d) and (f) of Chapter 74 of Custom Tariff.
Thus, it is clear that there was no suppression of any kind and in these circumstances, the invocation of a longer period of limitation cannot be justified. The notice is clearly barred by limitation - The appeal is consequently allowed.
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2024 (2) TMI 1317 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Condonation of delay in filing the Appeal - Appellant submits that since certified copy which was sought has not been given, the Appellant could not file the appeal in time and delay in filing the Appeal need to be condoned - HELD THAT:- Jurisdiction to condone the delay is limited to only 15 days after expiry of the limitation under Section 61(2) proviso. Even from the own case of the Appellant, it is clear that for the first time the certified copy was applied on 23rd November, 2023 physically. The email was sent on 18th November, 2023 prayer of which we have quoted above cannot be treated to be an application for certified copy, according to own case of the Appellant, application for certified copy was made on 23.11.2023 after 30 days of passing of the order dated 19.10.2023 - no benefit under Section 12 of the limitation act can be allowed to the Appellant whereas admittedly according to the Appellant, the certified copy was not given.
The Appeal having been filed on 23rd January, 2024 which is well beyond time and well beyond period of 15 days which is permissible to be condoned under Section 61(2) proviso, the delay cannot be condoned in filing the Appeal - Delay Condonation Application is dismissed.
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2024 (2) TMI 1316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH , NEW DELHI
Initiation of CIRP - Personal Guarantors - Maintainability of Applications filed under Section 95 sub-section (1) of IBC - time limitation - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - HELD THAT:- In view of the judgment of the Hon’ble Supreme Court in DILIP B JIWRAJKA VERSUS UNION OF INDIA & ORS. [2024 (1) TMI 33 - SUPREME COURT], it is settled now that question of adjudication of issues between the parties arises only at the stage of Section 100 and the RP has only role of facilitator. The RP has to submit a Report, after examining the Application under Section 95 and after giving opportunity to Personal Guarantor. The role of RP has been elaborately examined by the Hon’ble Supreme Court in the aforesaid case and it is held that RP does not perform any adjudicatory function, nor even can take an administrative decision. The role of RP has been held to be only facilitator. The judgment relied by learned Senior Counsel for the Appellant in SHANKARLAL AGGARWALA VERSUS SHANKARLAL PODDAR [1963 (1) TMI 40 - SUPREME COURT] has no application in the facts of the present case.
Insofar as the submission of the Appellant(s) that Adjudicating Authority failed to take into consideration that authorization was not filed by the RP, it is always open for the Appellant to take such or other pleas as permissible at the time of adjudication of issue, including any defect in the Application under Section 95 and the said question also does not require any consideration at the stage when RP is appointed. Of course, if there is any invalidity or shortcomings while appointing the RP, Section 98 is there for the debtor or creditor, which provides for replacement of the RP.
There is no error in the impugned order passed by the Adjudicating Authority appointing the RP - There is no merit in these Appeal(s) - The Appeal(s) are dismissed.
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2024 (2) TMI 1315 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , CHENNAI
Initiation of CIRP - Admission of main company petition - liability of Guarantor of loan - acknowledgment of debt by the Principal Borrower shall be binding on the Guarantor or not - plea of the Appellant is that the ‘action’ as far as the Corporate Guarantor is concerned, the same is barred by Limitation and that Article 137 of Limitation Act 1963 applies - HELD THAT:- As per the decision of Hon’ble Supreme Court in Laxmi Pat Surana’s case [2021 (3) TMI 1179 - SUPREME COURT], the liability of the Guarantor being co-extensive with the Principal Borrower under Section 128 of the Indian Contract Act, 1872 it triggers the moment the Principal Borrower commits default in paying the acknowledge debt and this being a legal fiction and such a ‘liability of the guarantor will flow from the Guarantee Deed and Memorandum of Mortgage created therein’.
On a careful consideration of respective contentions, this ‘Tribunal’, taking note of the facts and circumstances of the instant case in an encircling manner, and ongoing through the impugned order passed by the Adjudicating Authority/NCLT Kochi Bench, comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in admitting main petition holding that the debt has not been paid by the ‘Corporate Guarantor’ is free from any legal flaws.
Application dismissed.
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2024 (2) TMI 1314 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB
Improper handling of Resolution Plan - Respondent No.1 alleges that the Resolution Professional (RP) violated the process by opening a sealed cover containing the plan without the presence of the Committee of Creditors (CoC) and Principal Resolution Applicants (PRAs). - HELD THAT:- Regulation 39 of the CIRP Regulations, 2016 also requires the Resolution Professional to look into the Resolution Plan submitted by the Applicants and to place the plan before CoC which is in compliance with Section 30(2). The opening of Resolution Plan by Resolution Professional is essential for further process in the CIRP. The Resolution Professional without opening the plan cannot come to any opinion whether the plan is complaint to Section 30(2) or not. There is no regulation or law which provide that the Resolution Professional should open the plan in presence of CoC and PRAs. Learned counsel for the Respondent No.1 has been unable to show any provision of law which require that the Resolution Professional shall open the plan in presence of CoC and PRAs.
The order passed by the Adjudicating Authority is unsustainable - In result, Appeal is allowed.
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2024 (2) TMI 1313 - SC ORDER
Maintainability of petition - availability of alternative remedy - petitioners are willing to avail of the said remedy - HELD THAT:- These special leave petitions disposed off reserving liberty to the petitioners herein to file the statutory appeal within a period of one month from today. If such an appeal is filed within the aforesaid time frame, the Tribunal shall not raise the issue of limitation in filing the said appeal.
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2024 (2) TMI 1312 - BOMBAY HIGH COURT
Circular issued by the Central Board of Indirect Taxes and Customs not considered by Respondent No.3 in passing the impugned order - HELD THAT:- Stand over to 20th February 2024 to enable Respondents to place on record reply affidavit. Let a copy of the reply affidavit be served on the learned Advocate for the Petitioner well in advance. Till the next date of hearing, impugned order shall remain stayed.
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2024 (2) TMI 1311 - CESTAT BANGALORE
Levy of equivalent penalty imposed under Section 78 of the Finance Act, 1994 invocation of Section 80 of FA - Classification of service - Erection, Commissioning and Installation or not - providing services of fabrication and erection work of cement plant, sugar plant, coal mill, equipment, etc. - period from 10th September 2004 to 31st December 2008 - HELD THAT:- The appellant failed to justify any reasonable cause for non-payment of Service Tax during the relevant period supported by evidences. Ignorance of law or belief of non-applicability of Service Tax to the services rendered for a long duration of five years cannot be considered as a reasonable cause nor difficulty in arranging working capital be considered as sufficient reason for non-payment of Service Tax during the relevant period. Cumulatively, it is not a fit case to invoke Section 80 of the Finance Act; hence, the penalty imposed by the learned Commissioner cannot be interfered with.
The impugned order is upheld and the appeal is dismissed.
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2024 (2) TMI 1310 - CESTAT NEW DELHI
Recovery of service tax with interest and penalty - entitlement to the benefit of the VCES Scheme - onus to prove - no corroborative evidences - appellant did not appear for personal hearing despite several opportunities granted and the duty demand was affirmed ex-parte - HELD THAT:- The appellant had not been actively participating in the proceedings. Before issuing the show cause notice, the Deputy Commissioner, CGST vide letter dated 13.04.2018, had requested the appellant to submit the documents, i.e., IRRs, Balance Sheets, Form 26AS and ST3 returns for the period 2012–13 to 2014–15 for examination of service tax liability on the services provided by them, however, the appellant never responded thereto nor submitted the requisite documents. Even after issuance of the show cause notice, the appellant did not submit any reply and though several opportunities were granted by the adjudicating authority the appellant did not appear and accordingly proceedings were concluded ex-parte. On appeal, the Commissioner (Appeals) remanded the matter to the adjudicating authority with directions to pass a speaking order after considering the submissions of the appellant in true spirit by following the principles of natural justice and the appellant was directed to produce all related documents to the adjudicating authority.
Normally, the present appeal needs to be rejected considering the conduct of the appellant in not submitting the required documents at any stage, however with all fairness and in the interest of justice, it is felt that an opportunity to produce all the relevant documents in support of the submissions made, needs to be granted to the appellant. The appellant is once again directed to produce the VCES-2 and VCES-3 as the burden of proof is on the appellant. The appellant may also produce the documents in support of his submissions that he is exempted under the threshold limit of exemption for small scale service providers and that the services rendered by them are classifiable as ‘works contract services’ where discharge of 50% of service tax liability under reverse charge by JVVNL is in consonance with the notification.
The adjudicating authority is at liberty to consider all the submissions in the light of the documents to be placed by the appellant and pass a speaking order. The impugned order, is therefore set aside - the appeal is allowed by way of remand.
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2024 (2) TMI 1309 - CESTAT HYDERABAD
Classification of services - construction/development works in four ventures/ projects - to be classified under works contract service or Construction of Residential Complex Service? - HELD THAT:- Post judgment in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT], CRCS would not be the appropriate classification as this was in the nature of indivisible composite contract and therefore, would be more in the nature of WCS, and since there was no appropriate head i.e., WCS, available prior to 01.06.2007, the demand for this period would fall on this ground itself. In fact, the Board has also clarified vide Circular No. 151/2/2012-ST dt.10.02.2012, that for the period prior to 01.07.2010, construction service provided by the builder/developer will not be taxable in terms of earlier Board Circular No. 108/02/2009-ST dt.29.01.2009. In other words, there would be no liability.
When SCN has proposed demand under WCS post 01.06.2007, whether that demand will still sustain or otherwise? - HELD THAT:- In this case, the SCN has proposed CRCS for the period up to 01.06.2007 but for the same activity, the services have been considered as WCS for the period post 01.06.2007. The rationality is that while services of CRCS continue to be specified service even beyond 01.06.2007, in view of the clear definition of WCS, it will be more appropriately classified under WCS as compared to CRCS, having recourse to Sec 65A.
It is obvious that prior to 01.06.2007, there was no scope for deciding the classification, in view of the fact that CRCS was appropriately covering the activity in terms of its definition and in fact, in terms of Notification, there was a provision for exclusion of value of material involved in providing that service, so that only the service portion is charged to service tax. However, post 01.06.2007, the situation has changed where two different services heads are now available in respect of indivisible composite contract, which is not being denied by either side.
For the period post 01.06.2007, it is obvious that the definition of WCS covers it more specifically as compared to the CRCS and therefore, by applying principle of classification under Sec 65A, the most specific entry for the nature of service would have been WCS and not CRCS, which existed post 2007 also. Thus, to that extent the Commissioner has not appreciated the true nature of transaction and the scope of Sec 65A and there is no bar in changing classification, especially, in cases where there is scope for classifying it more appropriately under a different classification, post introduction of the levy. Sec 65A, cannot be applied only at the threshold but it can also be applied in the event of any change in classification due to change in definition of existing service or introduction of new services, unless otherwise barred by the Act itself.
Therefore, once the service is rightly covered under WCS post 01.06.2007, the next question is whether they will be entitled for exemption under Circular No.151/2/2012-ST dt.10.02.2012. Learned AR has vehemently opposed that Board Circular clarifying that no taxability on construction service for the period prior to 01.07.2010, would only be applicable in respect of construction services falling under clauses (zzq) & (zzzh) of Sec 65(105) and not in respect of WCS. Therefore, there is no exemption from service tax for WCS, which is the appropriate classification.
This issue has been decided by this Tribunal in favour of the Assessee in the precedent orders in the case of M/S KRISHNA HOMES VERSUS CCE, BHOPAL AND CCE, BHOPAL VERSUS M/S RAJ HOMES [2014 (3) TMI 694 - CESTAT AHMEDABAD], holding that though classifiable under WCS, no tax is payable for the period prior to 01.07.2010.
There being no merit in the Appeal of Revenue - Appeal dismissed.
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2024 (2) TMI 1308 - CESTAT HYDERABAD
Eligibility for exemption under Notification No.25/2012-ST - Works Contract Services (WCS) provided to Andhra Pradesh Education Welfare Infrastructure Development Corporation Ltd (APEWIDC), Andhra Pradesh Medical Services Infrastructure Development Corporation Ltd (APMSIDC), Andhra Pradesh State Police Housing Corporation Ltd (APSPHCL) - exemption for construction of IT tower building by way of Works Contract provided to SEZ Authority - HELD THAT:- The three entities/institutions viz., (i) APEWIDC, (ii) APMSIDC & (iii) APSPHCL have been set up by the State Government and are fully controlled by the State Government for furthering the statutory functions of the State Government like providing health, medical and education and housing facilities. It is further the function of the State Government to provide housing for its staff including the Police staff.
It is found from the copy of the Andhra Pradesh Reorganisation Act, 2014 published in the Gazette of India Extraordinary Part II dated 01.03.2014, wherein Sec 68(1) of the said Act provides that – the companies and corporations specified in the Ninth Schedule constituted for the existing State of Andhra Pradesh shall, on and from the appointed day, continue to function in those areas in respect of which they were functioning immediately before that day, subject to the provisions of this section - the aforementioned three entities are carrying out the activities as mentioned in Article 243W read with Twelfth Schedule of the Constitution of India and thus, the Appellant is entitled to exemption under Notification No.25/2012-ST with respect to services provided to these three entities, being WCS.
Services provided through the main contractor by the Appellant to APEWIDC - HELD THAT:- It is found from the documents produced in the course of Hearing corroborate that the Appellant has rendered WCS being construction of school buildings, which is exempt under Notification No.25/2012-ST, S.No.12(a) & (c) and thus, the Appellant is also entitled to exemption as subcontractor under S.No.29(h) of the said notification.
The demand of Rs.16,91,682/- and Rs.3,80,518/- being services provided to governmental authorities set aside - the demand of Rs.6,26,762/- on WCS provided to APIIC, Kakinada (SEZ), it is held that the same is exempt under the provisions of the SEZ Act (Sec 7 read with Sec 51), which has got overriding effect on the provisions of Service Tax Act, and accordingly, this demand is also set aside.
The demands as well as penalties imposed are set aside - this appeal is allowed.
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2024 (2) TMI 1307 - CESTAT KOLKATA
Levy of Service Tax - Business Auxiliary Service - contract with its clients to render services in relation to import of goods from abroad - activities undertaken by the appellant are covered within the ambit of Clause (vi) of Section 65(19) of the Finance Act, 1994 or not - scope of SCN - demand in the instant case is sustainable when the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised - HELD THAT:- The services provided by the OLSPs will be taxable under clause (vi) of Section 65(19) mentioned above, only if the services are provided on behalf of the Appellant to the customers of the Appellant. In the present case, the OLSPs are not acting as 'agents' of the Appellant while handling the cargo of the customers of the Appellant. The OLSPs books space on various shipping lines/airlines for the purpose of transportation of the goods from abroad to India. The contract is with the shipping line/airline and OLSPs. The shipping line/airline issues invoice in the name of the OLSPs. In case of defect, the shipping line/airline can sue only OLSPs. OLSPs in turn enter into contract with Appellant. OLSPs charge agreed fixed charges from Appellant. There is no contract between OLSPs and the customers of the Appellant. Accordingly, the OLSPs cannot be taxed under clause (vi) of the business of auxiliary service as there is no contract between the OLSPs and customers of the Appellant.
The expression “on behalf of the client” in clause (vi) presupposes existence of three parties. The services should be provided as an agent of the principal to the customers of the principal. If the services are provided by the agent to the principal, that will be not covered in the scope of clause (vi).
In the case of SAI COMPUTER CONSULTANCY VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [2011 (8) TMI 788 - CESTAT, NEW DELHI] it has been held that When the client of the appellant was UP Power Corporation Ltd., it cannot be held that the appellant served clients of that Corporation on its behalf. Therefore, the appellant goes out of the ambit of sub-clause (vi) of the term ‘business auxiliary service’ defined by law prevailing at the relevant time.
Thus, the services rendered by the OLSPs cannot be categorized under the category of 'Business Auxiliary Services'. Hence, the demand of service tax under the Category of 'Business Auxiliary Services' in the impugned order is not sustainable.
Scope of SCN - SCN has not specified any specific sub-clause of Section 65(19) under which the activities under taken by the OLSPs would fall - HELD THAT:- In the impugned order, the Ld. Adjudicating authority only classified the activities undertaken by the OLSPs under the category of “business auxiliary service” under Section 65(19)(vi) and (vii) read with Section 65(105) (zzb) read with Section 66A of the Finance Act, 1994. Such a categorization is not available in the notice while demanding service tax under the category of 'Business Auxiliary Service'. It is a settled law that the defect in the notice cannot be cured by the observations of the adjudicating authority. Accordingly, the demand of service tax along with interest and penalty confirmed in the impugned order is not sustainable as the Show Cause Notice fails to specify under which sub-clause of Section 65(19) the demand has been raised.
The demand of service tax confirmed along with interest and penalty confirmed in the impugned order under the category of 'Business Auxiliary Service' is not sustainable and accordingly, the same is set aside - Accordingly, the appeal filed by the appellant is allowed.
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2024 (2) TMI 1306 - CESTAT KOLKATA
SVLDR Scheme - whether the Appellant has discharged the amounts specified under SVLDRS-3? - whether SVLDRS-4 Certificate was issued by the Department or not? - HELD THAT:- The Department has not issued the SVLDRS-4 Certificate since Rule 7 of SVLDRS Rules, 2019 very clearly states that the amount arrived at under SVLDRS-3 should be paid within 30 days from the date of its issue - there is no provision to extend this time limit and no powers have been conferred to any authority to do so. Therefore, the Appellant is not eligible to get the benefit of SVLDR Scheme.
The Appellant was issued Show Cause Notice based on the Income Tax Returns filed by them. By taking into account the TDS deducted by the clients under Form 26AS, Show Cause Notice has been issued to the Appellant. The Appellant has been maintaining that they have undertaken the services falling under “Works Contract Service” wherein they have provided the materials and also provided the services towards construction services - From the Show Cause Notice, it is seen that the quantification of demand has been made without considering the fact that the Appellant is providing the Works Contract Service. The Service Tax has been demanded @ 10% of the consideration received by them. Admittedly, the evidence provided by the Appellant shows that they were carrying Works Contract Service only.
Matter remanded to the Adjudicating Authority with the following directions:- (i) The demand should be quantified by taking the Service Tax rate as per the Composition rate applicable for Works Contract, during the period under dispute. (ii) The Appellant should be granted opportunity to present all their documentary evidence towards their submission along with details of payments made by them. (iii) The Pre-deposit amounts paid and the amount paid in terms of SVLDRS-3 Certificate should be taken as part of the Service Tax payment against the quantified demand. (iv) In respect of the balance quantified demand, if any, the Appellant should be directed to pay the same. (v) For all the payments done, the interest is to be paid by the Appellant as per the applicable provisions.
The penalties imposed under Section 77 & 78 of the Finance Act, 1994 set aside. The Fine imposed under Rule 7(C) of the Service Tax Rules, 1994 is upheld and is required to be paid by the Appellant - appeal disposed off.
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2024 (2) TMI 1305 - CESTAT BANGALORE
Recovery of Service tax with interest and penalty - non-inclusion of certain expenses like inspection charges, property evaluation fees, postage charges etc. in the transaction value - period April 2010 to March 2016 - HELD THAT:- In the Review Order, only the statutory principle of law has been reiterated and no evidence has been adduced to negate the specific findings of the adjudicating authority holding that the service tax on all these expenses, by including the same in the gross transaction value has been discharged by the respondent.
In the result, the impugned order is upheld and the Revenue’s appeal being devoid of merit, accordingly dismissed.
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2024 (2) TMI 1304 - CESTAT MUMBAI
Classification of service - development of a market at Biocholim and Ponda for the Goa State Urban Development Agency - works contract service or not - HELD THAT:- In the instant case, though it was the contention of the appellant that a new building had been constructed and renovation or restoration was not carried out, but this aspect has not been considered by the Commissioner in the impugned order and the Commissioner proceeded to examine the issue by considering the activity as one of restoration or renovation.
Even if it is assumed that the appellant had carried out renovation or restoration work, then too clause (d) of Explanation clearly provides that the activity should in relation to ‘(b)’ and ‘(c)’. Thus, such activity has to be primarily for the purpose of commerce or industry. According to the Commissioner, the words ‘primarily for commerce or industry’ figuring in clause (b) of the Explanation would not mean that if the construction is not meant for ‘commerce or industry’, it would not fall within the scope renovation or restoration work mentioned in clause (d) of the Explanation.
In the absence of any finding recorded by the Commissioner that the construction was primarily for the purpose of ‘commerce or industry’, it is not possible to sustain the demand under section 65(105)(zzzza) of the Finance Act. For this reason alone, the order dated 18.03.2015 passed by the Commissioner deserves to be set aside.
The order dated 18. 03. 2015 passed by the Commissioner is, accordingly, set aside - appeal is allowed.
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2024 (2) TMI 1303 - CESTAT MUMBAI
SSI Exemption - classification of goods - manufacturing articles of rubber - goods conforming to description corresponding to tariff item 4008 1110 of Schedule to Central Excise Tariff Act, 1985 was sought to be re-classified against tariff item 4008 1190 of Schedule to Central Excise Tariff Act, 1985 - HELD THAT:- Taking up the issue of classification as it is contingent upon resolution thereto that the discarding of claim for exemption available to ’small scale industry (SSI) will become relevant. At the outset, particular emphasis laid on the rigours of classification, within the framework of General Rules for Interpretation of the Schedule appended to Central Excise Tariff Act, 1985 and judicial determination, which forecloses admission in statements from having anything but peripheral influence on the exercise.
In the absence of any exposition of description corresponding to the proposed classification, it is well nigh impossible to approve the manner in which the adjudicating authority has proceeded.
Though there is elaborate discussion on the purported evidence, such as formulation found in private records, admission in statements that these reflected reality and samples sent for testing, the key to the findings are the reports of tests from Deputy Chief Chemist, Vadodara on the composition of the ‘end product’ as being polyethylene. This, along with the conclusion that the product is ‘not rubber’, led to the re-classification insofar as the appellant-assessees are concerned. While the presence of ‘polyethylene’ does fulfill the requirements of note 1 in chapter 39 of Schedule to Central Excise Tariff Act, 1985 and has not been controverted, there is abundantly less certainty on the conclusion in the test report of ‘no rubber’ especially when concatenated with the findings in the impugned order that ‘rubber’ was consumed in the production process.
The grounds of appeal preferred in the challenge mounted by Revenue to the impugned order confirms the need for re-determination. On the outcome of fresh determination also rests the appropriateness of penalty imposed on the individual-appellant. For those purposes, the impugned order is set aside and notice restored to the original authority for fresh decision on claim of appellant-assessees.
Matter remanded on issue insofar as appellant - assessee is concerned, the appropriate disposal of this appeal of Revenue too is re-determination of the dispute by the original authority - the appeals allowed by way of remand.
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2024 (2) TMI 1302 - CESTAT MUMBAI
CENVAT Credit - duty paying documents - fraudulent transactions - eligibility of the credits availed by the Appellant on the basis of invoices issued towards purchase of sandalwood oil - HELD THAT:- Receipt of inputs as such by the Appellant and duty paying documents in conformity to Section 9 of the CENVAT Credit Rules are material for the purpose of determination of its eligibility to avail the credits. The inputs were supposed to be sandalwood oil but what was being transported/supplied were actually nothing but “plain water”, as noted by learned Commissioner in para 2.4 of his order describing content of search report for the 1475 kg of crude sandalwood oil, which were found in sealed condition and bound in wooden crates with airport security seal intact but when broke open and verified was found to be plain water only.
The sandalwood oil imported by him were of pure variety and there is nothing in trade known as crude sandalwood oil but for the purpose of certain rectification, method of distillation is applied so also in the case of Patchuli Oil. M/s J.G. Spices Ltd. was one of his customer to whom he supplied imported sandalwood oil and Patchuli oils in containers in the same sealed condition without any further processing. Being confronted with the fact that during search and seizure made by DGCEI of the stock of raw materials and finished group available at M/s J.G. Spices Ltd. premises representative sample were drawn from each container and Directorate of Forensic Science report was called for vide letter dated 29.09.2010 and it conformed the material content was nothing but “water” to which the Appellant’s reply was that they used to open the container, upon receipt and even Customs Officer do so before clearance but the cap of the drums were only put back without re-sealing.
There are no hesitation to come to the conclusion that goods were imported in sealed condition, taken to M/s. J.G. Spices Ltd., Meghalaya and kept therein also in sealed conditions and again returned back to different traders including the Appellant in sealed conditions affixing transit permit, railway freight invoices and in the process additional Excise Duty which was VAT component of State’s tax collected by Union and Central Excise duty both were realized at both the points by the supplier and purchasers respectively causing loss to the State exchequer.
The Appellant had not purchased sandalwood oil from M/s J.G. Spices Ltd. through those invoices and the goods transportation documents would not absolve the Appellant from its liability that the inputs against which credits availed were in fact not valid inputs namely sandalwood oil - Appeal dismissed.
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